If the marginal cost curve shifts upward,a profit-maximizing monopolist that does not practice price discrimination is likely to respond in the short run by _____
A)raising price and increasing output.
B)raising price and decreasing output.
C)keeping price constant and increasing output.
D)reducing price and increasing output.
E)shutting down.

Question

Quizplus · Accepted Answer

When the marginal cost curve shifts upward, the profit-maximizing monopolist will produce less output in order to reduce their marginal cost to equal marginal revenue. This means that the monopolist will increase the price to cover the higher costs and decrease the output in order to maintain their profit level. Therefore, the most likely response to an upward shift in the marginal cost curve is to raise the price and decrease the output.

If the Marginal Cost Curve Shifts Upward,a Profit-Maximizing Monopolist That